Sovereign Wealth Funds Of Russia:Investment Strategy And Role In Combating Financial Crisis

Thecontemporarylevelofglobalizationthrowseverygovernmentachallengeofcyclic alresistancetofluctuationsinfinancialmarkets.Having met the negative influence of the latest global financial crisis, a lot of countries actively used sovereign wealth funds to stabilize the national economies and solve their long-term strategic tasks.A try to systemize the current scientific views on sovereign wealth funds is made in this paper:SWFs are given quite a wide definition, the specific role of these economic entities and their functions are distinguished, and classification of SWFs is made on this basis.The paper describes the current condition of sovereign wealth funds, analyses the changes in their investment strategies caused by the crisis. Different levels of profitability are estimated for different types of sovereign wealth funds. Analysis of the open data shows, that annual profitability of the investments of strategic funds has been around 10%, stabilization funds have been able to sustain the level of more than 5%, whereas the average level of annual profitability for reserve funds has been less than 5%.Moreover, the directions and characteristics of allocation of sovereign wealth funds are distinguished in this paper for those of them that participated in national anti-crisis measures of 2007-2010. In this regard, the leading role of the Russian sovereign wealth funds is being highlighted, as long as they were used to the maximum extent. Russia used the largest absolute amount of resources,121.8 billion dollars, allocated by the sovereign wealth funds on the measures of anti-crisis stabilization. It totaled to 8.4% of Russian GDP or 64.21% of the aggregate amount of the country’s sovereign funds. In 2009 the GDP of Russia fell by 7.9%, andit points to the fact that the structure of the Russian economy is seriously misbalanced and that the resources of its sovereign funds were either used irrationally or the allocation of funds was mistimed.The characteristic of formation and usage of the Russian sovereign wealth funds is given in this paper. The discrepancies between the initial goals and the real functions of the Russian sovereign wealth funds are discussed. The investment strategy of Russia’s Stabilization Fund, Reserve Fund and National Wealth Fund is analyzed on the basis of international experience. The results of the Russian sovereign wealth funds’activities since their establishment to the beginning of 2014 have been evaluated. Recommendation on the ways of modernization of sovereign wealth funds investment strategies is given in the conclusion of this paper.